There's More to MBAs Than Legal Fraud

By

Neil McIntosh

Updated Feb. 22, 2011 4:19 a.m. ET

For someone who has never attempted a Master's in Business Administration, Josh Kaufman certainly has some strident views about MBAs.

"MBA programs," he writes in an introductory chapter, "teach many worthless, outdated, even outright dangerous concepts and practices." They cost a fortune and won't even win you a berth in the C-suite, he warns, citing a 2002 study that found having an MBA didn't correlate with career success.

ENLARGE

Adam Niklewicz

The Personal MBA: A World-Class Business Education In a Single Volume

By Josh Kaufman Portfolio Penguin, 416 pages, £12.99

MBAs aren't just bad news for the poor individuals suckered into mortgaging their lives to study. Once released into the world, the graduates start destroying value, too. "MBA-trained executives," warns Mr. Kaufman, "have unwittingly gutted previously viable companies in the name of quarterly earnings per share."

He concludes: "Business is about creating and delivering value to paying customers, not orchestrating legal fraud. Unfortunately for us all, business schools have de-emphasized the former in favour of teaching the latter".

Dangerous, value-destroying frauds? Big claims, but Mr. Kaufman goes on to lay more—much more—blame at the door of the MBA schools and their students before finally getting to the meat of his "world-class business education in a single volume."

Now, I should perhaps offer a confession at this point; I have an MBA. It's not one of those fancy, expensive, two-year MBAs from a big, famous school—the ones for which Mr. Kaufman reserves his greatest disdain—but it is still an MBA, which cost me some money a few years ago. I have skin in this game.

Mine came from the U.K.'s rigorous but unfashionable Open University, conducted at distance over three years of textbooks, essays, tutorials and exams. I found mine useful—from day one—in the job I continued to hold down while studying. No, it didn't land me in the C-suite, but I haven't brought down a major multinational through my brilliantly fraudulent financial scheming. And I enjoyed it, and urged family and friends to follow me down the same path.

Mr. Kaufman has no MBA, but he does have a business education from a program at his university described as "essentially an MBA at the undergraduate level"—presumably sans the fraudulent bits they do at postgraduate school. He has experience, too, moving from there to a management position at Procter & Gamble.PG-0.89% Having landed that, he decided to skip more formal education in favor of devouring business books in his own "personal" MBA program.

Dig beyond the bluster of the opening paragraphs, then, and what follows is the distillation of his huge reading list. This is a broad run through the fundamentals of business, as much reference guide as traditional read-through. Headings such as "marketing," "sales," "finance," "the human mind" are broken down into brief, one-or-two-page subtopics. Those are competent, punchily written and laudably clear, though the lack of case studies—perhaps a casualty of the book's breadth—means this can be a dry read.

Does it work on a practical level? It certainly offers a competent guide to some of the key points of business theory. For those lacking confidence in business—who may be the target market—this will make a useful primer, and a good leaping-off point for further voracious reading, in the style of Mr. Kaufman himself.

"The Personal MBA" suffers, however, from one major omission; it doesn't provide anything like enough detail on basic financial skills, such as understanding financial statements, or on techniques such as discounted cash flow and net present value. These terms are mentioned, but only in passing in the sales chapter.

They're also alluded to later in the finance chapter, but not by name, alongside a reference to McGraw-Hill's "36-Hour Course in Finance for Non-financial Managers." That recommendation is excellent, as are many of the books on the reading list (even if it tends toward the populist, rather than the academic). And Mr. Kaufman is up-front about his book's limitations—"learning how to manage money is a very important topic," he writes, "...but the ins and outs of managerial accounting and financial analysis are beyond the scope of this book."

That's a shame. This is need-to-know stuff for any manager contemplating a new business, or even a conversation with a finance specialist. It jars with Mr. Kaufman's apparent—and laudable—aim to democratize the understanding of how businesses work. No real MBA would be complete without it, never mind a "world-class business education."

When I started my Master's, we were told to expect a big change to the way we studied as undergraduates. There would be no spoon-feeding of facts and verdicts to regurgitate in papers and exams. Instead, we would be armed with first principles and tools, and a debate how they would be used. The way we chose to use them and the conclusions we drew, however, would be our own. Thinking for yourself was a key product of a Master's-level education.

That ammunition is missing from "The Personal MBA." Because it can't delve deep into the principles examined in a real MBA, it can't help its readers think more critically about their work. While the book offers a useful primer for those naïve about how businesses function, it fails to arm readers with nearly enough to outsmart those crafty MBAs or challenge the hegemonies against which Mr. Kaufman rails.

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